7 Inhaltsverzeichnis 1. Introduction Intention of the Thesis The cooperation with KommaSystem and HeurekaNet Family firms and the Business Transfer Strengths and weaknesses of Family Firms The Family Business between the conflicting priorities of Company and Family The topic of gender in Family Businesses The natural leadership talents of Women and their preference of soft factors The social status of the Wife in Family Businesses The Succession as a continual process Corporate Culture as a factor for success Definition of Corporate Culture Value creation of the first generation in Family Firms Family-friendly staffing policy as a competitive advantage Methodology of empirical study Exploratory research design The research objective The Interviewee Results of the empirical study The Corporate Culture and its Sustainability from the viewpoint of the female general managers The Corporate Culture and its Sustainability from the viewpoint of the Successors Discussion of the Own Analysis Conclusion and prospects Bibliography Monographs IV

9 1. Introduction The present Research Paper is based on the Bachelor Thesis of Kira Pfeiffer which deals with "The gender specific imprinted corporate culture in family firms An investigation of its sustainability during business successions. It compiles hypotheses concerning the gendered role of leading women working in these businesses and the sustainability of what they have achieved consciously or unconsciously concerning family-friendly policies and culture itself. These elaborated hypotheses and the possibility for an ongoing research could be a huge advantage for family firms which face the difficulties of a generational transfer and the insecurity of the sustainability of the imprinted culture. 1.1 Intention of the Thesis The research question serves as the base of the thesis and represents a completely new and complex issue which is not explored yet. The transfer of a business is especially important in family firms which want to ensure the continuation of their company. Therefore it is important to make fiscal considerations, to put hereditarily issues into writing and to find a suitable successor. The one question which will be answered in the course of the thesis and hence the corresponding research paper is: What will happen with aspects that influence the motivation and performance of employees and managers and therefore the economical success of the company which are sometimes not as concrete as a financial statement hence the corporate culture. The corporate culture of a business can be like an engine for the whole system and employees are used to certain manners, rituals and a corporate thinking. According to the latter statements, presumptions will be generated stating that female leading managers, as they often work side by side with their husbands in family businesses or even occupy the position of the CEO, have a high influence on the culture and family-friendly policies. Therefore the cultures of companies and the specific influence of business women in family firms on these corporate cultures will be examined, as well as the attitudes of the next generation, the male successors. These attitudes of the sons need to be investigated in order to enunciate statements about the sustainability of the potentially female imprinted cultures. Hence several work hypotheses will be developed and will serve as a research basis for the Bachelor Thesis. 1.2 The cooperation with KommaSystem and HeurekaNet The incitation for the topic of the outlined thesis was generated during an ongoing internship at the business consultancy KommaSystem in Münster, Germany. As a consultancy they stand for the connection between a functional-pragmatic approach with socio-scientific concepts of the management consultation or organisation development. Moreover they offer advisory service for personnel management related challenges, trainings for employees and leading managers and help to perform a reorganisation of the company for a better cooperation. Marcus Flachmeyer and Andreas Schulte-Hemming, the two business leaders of KommaSystem, founded the Freies Institut für Bildung, Forschung und Innovation HeurekaNet in 2000 which operates in the field of method and instrument development, intermediate trade and practice research for different kinds of systems and their protagonists. Their key activities include for instance compatibility of work and family, lifedomain-balance, gender mainstream and diversity. All participating firms in this study are members of the FAM2TEC project generated by HeurekaNet, which intends to encourage young women to decide 1

10 in favor of a technical or natural scientific study course or apprenticeship and to enhance the familyfriendliness of enterprises in order to attract this target audience. Owing to the focal points of interests of KommaSystem and HeurekaNet the theme for the thesis was developed and elaborated. 2

11 2. Family firms and the Business Transfer Since the discussed thesis deals with family firms it is important to get to know the difference between a conventionally controlled enterprise and the special characteristics of a business which has been in the hands of a family since generations. The business transfer is also distinctive in family firms compared to a conventional enterprise, due to the high family involvement in the firms and the associated higher emotionality. 2.1 Strengths and weaknesses of Family Firms Family firms have several advantageous strengths compared to non-family businesses in economics. Often the decision-making authority and the ownership is attributed to one person or a family. This gives the opportunity to consequently execute clear organization and business concepts without the interminable process of discussing every decision with a committee. The guidance of the company therefore emanates reliability which is of high importance for employees and associate partners. In addition the humaneness of the association with each other is strongly supported by the owning family and this attitude often excludes the competitiveness due to climbing the job ladder. Furthermore the staffing policy in family firms can have a competitive advantage compared to nonfamily businesses due to the fact that they often chase a honest policy of an open door, the parting of permanent controls and the opportunity of learning from mistakes. The result of this is that the firm loyalty is more pronounced which leads to a lower fluctuation and because each employee alternation is associated with costs, it has also a positive effect on the financial balance. In addition to the firm loyalty the identification of the staff and the leading managers result in a high motivation which is not bought at high costs through premiums. Besides further strengths would be the wide scope of action, the efficient and informal communication and the direct contact of associate partners with the name holder or the managing partner (Habig, 2010, PP. 9). On the other hand family businesses fear several different aspects which are in absent or better manageable anonymous incorporated enterprises. For instance the more difficult initial position concerning the funding and its liquidity in terms of inheritance tax, the transfer of reserves in profitless years for living of the shareholders and others. Apart from this it is often difficult for family businesses to attract qualified staff because they fear that family interests predominate in the end, decisions are not made on objective criteria, the concern about an authoritarian leadership and that top positions are only occupied by family members. But business families can work against these prejudices by establishing clear guidelines for employees and possible applicants. Also the succession of the business within the family is difficult and sometimes even ineffective, hence every tenth business transfer leading to an insolvency (Habig, 2010, PP. 10). Since 39% of the senior entrepreneurs cannot find an adequate successor (online: Bundesweite Gründerinnenagentur BGA, 2013) it is important for a family business to deal with this problem early and take required adjustments. In order for weaknesses not to endanger the company in its whole the owner family must consider the relationship of family and firm, as seen in the generation conflict and the succession planning. Secondly the finances and lastly the strategy including staff policy, corporate culture, form of organization, prospected growth and so on. 3

12 In summary the strengths and weaknesses can be described as different sides of the same coin (Hilburt-Davis et al., 2003, P. 23) because the informal infrastructure can be flexible and innovative and at the same time unclear and confusing. Or the family s involvement can stand for shared values and a sense of vision but also for a lack of objectivity and emotionally characterized decision making (Hilburt-Davis et al., 2003, PP. 23). Each family business has its unique strengths and weaknesses and it is important to consider these different dimensions while leading a family-owned business. 2.2 The Family Business between the conflicting priorities of Company and Family As already mentioned family firms face a difficulty which non-family firms do not due to the conflicting priorities of company and family. These two different social systems influence each other, overlap, interact and are interdependent. Firstly the systems consist of unique behavioural patterns, principles, values and norms and each has its own rules of conduct (Lindow, 2013, PP. 14). John L. Ward states that: The very nature of business often seems to contradict the nature of the family. Families tend to be emotional; businesses are objective. Families are protective of their members; businesses, much less so. Families grant acceptance unconditionally. Businesses grant it according to one s contribution. (Ward, 1987, P. 54) Secondly businesses and families exist for fundamentally different reasons, as businesses exist to regenerate profits through the distribution of goods and services (external orientation) and family exists to nurture and care for its members (internal orientation). Thirdly both differ in their goals they set. The business system is forced to herald and produce changes to ensure survival of the company, while the family tries to avoid changes to retain family equilibrium. Consequently decisions made in family firms, are reached within a dual system of business and family and explains why the family influence has consequences for issues such as organizational structure and strategy planning (Lindow, 2013, PP.15). 2.3 The topic of gender in Family Businesses The term gender was used and discussed more and more during the last decades in business economics. Whether the sociological term of reaching a glass ceiling by well educated women who want to climb the job ladder or differences in leadership style of men and women were topics in management forums or professional articles, the sociological-cultural based term gender is well known today. Leading manager need to be aware of sometimes even controversial aspects of the literature concerning this theme to be able to manage the company without prejudices or the adaption of clichés concerning the different sexes. Also family businesses can be attached great importance to the gender question due to several different aspects. For instance the social status of the wife of a CEO in family firms and their natural leadership styles or the selection of a successor and the role of gender. 4

13 2.3.1 The natural leadership talents of Women and their preference of soft factors As mentioned before men and women have several different behaviour tendencies which include also the leadership and communication styles. Different studies have shown that some of the leading talents women express more regularly than men (Online: Fisher, n.d.). In general it can be said that female leaders are possessing stronger interpersonal skills such as flexibility, sociability and empathy compared to their male counterparts. As a result of these skills, women in businesses can read situations more accurately and will take in information from different sides. Because of the willingness to see all sides of a given fact their persuasive ability enhances and it allows the female managers to come at a subject from their audience s perspective, so that the people they are leading feel more understood, supported and valued. (Online: Caliper, 2014). Consequently they will discuss the decisions through with many more employees than male managers. It includes that women have an open, collegial and consensus-building approach to leading (Online: Caliper, 2014). These networking, inclusion and collaboration aspects are leading to the conclusion that women are willing to share power more easily and regard it as an egalitarian network of supportive connections. (Online: Fisher, n.d.) Moreover women possess better negotiating, oral and language skills, like to inspire team members and give them space to develop themselves, have a win-win attitude and focus rather on consideration - than on the use of a punishment or reward system (Online: Chao, 2008). All these talents belong to the field of the so called soft skills. Scientists often relate the term of executive social skills (Online: Fisher, n.d.) to women in businesses, because they use all their conscious and unconscious gathered knowledge about the human being to create a good interpersonal atmosphere The social status of the Wife in Family Businesses The research on the topic of women working in family firms started only a few years ago so the literature concerning this issue is still sparse. Nonetheless a few remarks can be made on the roles of wives in family businesses. Women and especially wives of the Chief Executive Officer and Business Owner occupy either an invisible, professional or anchor role in their companies. Apart from this they hold often the second rank or head up one of the business functions, traditionally finance and accounting or sales (Online: Vadnjal et al., 2009, P. 161). So although female entrepreneurs enhanced their presence in the free economy, the majority of working women in family businesses stay in the background. This frequently happens in husband-and-wife businesses were business partners often bypass the women and want to hear a final decision of their spouses. Often the husband is the last instance and has a more selective and specific role, while his wife needs to consider the different issues concerning family and business. To manage the household, raising the children and at the same time being present, effective and successful in the business is even more complex today. To cope with work and home remains a continual juggling act. In general it can be assumed that the wives do not plan a career in their family business, do not aspire to ownership, and see their work as a job, rather than a career. (Online: Cole, 1997, P. 2). Moreover the stereotypes as highlighted by research suggest that women rather fall into a kind of nurturing role in business situations than to be a calculating business manager (Online: Cole, 1997, P. 13). In addition to this other typical skills attributed to women lead them into a position as a conciliator, mediator or adviser (Weller, 2010, P. 16). 5

14 Although a number of studies have shown that the female leadership differs from the male ones, these distinctions are no disadvantages in family businesses. Actually it can be proposed that women adopt a complementary role in terms of bringing softness into the often male characterized management style (Online: Vadnjal et al., 2009, P. 172). In summary it is important to appreciate and understand the complexity of female managers working in family firms due to the fact that especially wives have an enormous influence on their husbands and on the arrangement of the management style and hence on the corporate culture. 2.4 The Succession as a continual process The succession of family firms has been identified as one of the most important and difficult decisions that the entrepreneur is forced to make. The European Commission reported in 2008 that nearly 10% of all bankruptcy cases in Small-Medium Enterprises (SMEs) can be traced back to an inadequate succession. Bankruptcy endangers about businesses and workplaces in Europe each year, an insight which demonstrates the macroeconomic dimension of this issue (Arnaud, 2011, P. 14). Because the present thesis is a matter of within-family successions, the following aspects deal with the arrangement of generational transfers from parents to offspring. To avoid a succession failure and to ensure the continuity of the business it is important to look at the succession plan as a long-term project. This offers the possibility to concern oneself with the formulation of goals and how to pursue them. Consequently, it will lead to distinctiveness and continuity of the business development. In general the transfer to the next generation should be implemented in five stages: 1. Planning of the strategy 2. Selection of the successor 3. Testing the successor 4. Involvement of the successor 5. Handover of responsibility (Habig et al., 2010, PP. 125) Ideally it should take several years for the five stages to be completed and the planning is not finished with the selection of the successor. It must be permanently reviewed until the final transfer of responsibility because of the changing circumstances during the whole succession process. Further key points are firstly the awareness that the change in the top position of the organization can alter the direction and politics of a business (Online: Cabrera-Suárez, 2005, P. 73), secondly the need to be creative in seeking solutions for new problematic organisational processes, and thirdly the key role of the family, other stakeholders and employees in supporting the new Chief Executive Officer (CEO) (Online: Pardo-del-Val, 2008). But the most important and at the same time most critical factor is the motivation of the potential successor to continue the family-owned business (Online: Griffeth et al., 2006, P. 491). It depends on 6

15 him or her and the ability of the predecessor to disengage whether the company is able to survive the transfer successfully or not. 7

16 3. Corporate Culture as a factor for success Businesses consist of several distinctive components, for instance different departments like Accounting, Sales, or personnel division and furthermore the executive departments in crafts enterprises and the level of seniority with a board of directors and so on. These components represent something concrete but one important aspect is missing: The consciously and unconsciously created corporate identity and culture of the company. Nearly all successful businesses in different industrial sectors have a pronounced corporate culture in common. The success factor corporate culture and its significance in family firms is described in the following sub-chapter. 3.1 Definition of Corporate Culture It is a relatively recent development in literature to consider that organizations have a culture. The concept of corporate culture, coined in the 1970s, was and is largely discussed in the available literature which leads to many differing definitions and approaches (Ihlenfeld, 2007, P. 26). In general the term corporate culture is a simple application of culture theory to an organizational context. (Röhm, 2006, P. 23). By using this approach Edgar Schein, one of the co-founders of organization psychology, developed a model which is clearly favoured by the largest part of management literature since it provides a larger number of interfaces for working and acting on the culture process (Röhm, 2006, P. 23). Edgar Schein defines culture as: ( ) a pattern of basic assumptions invented, discovered, or developed by a given group as it learns to cope with its problems of external adaption and internal integration that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems. (Schein, 2004, P. 17) The mentioned model includes three different levels illustrated in the following diagram: Figure 1: Schein s three levels of culture 8

17 Source: The top level is dealing with Artefacts which describe the visible attitudes and other physical manifestations of the group. For instance the communication behaviour with and between the employees and customers, the company logo, their language concerning the manner of speaking, their technologies and products, the mission statement but also rituals and myths and stories about the company. This level of culture is easy to observe but difficult to decrypt (Röhm, 2006, PP. 25). Below this level lie the Espoused Values which are contemplated as guidelines by the company. They manifest in the strategical planning, the objectives and the official business philosophy. Therefore they can be described as implications which dictate the behaviour of employees. During the formation phase of a group (a company also representing a group) the values are expressed in proposals about what and how do to something. If these proposals are accepted and good experiences are the outcome the group adopts the value attitude which then gradually enters the unconscious areas and becomes a Basic assumption. The latter situated on the lowest level includes the assumptions taken for granted concerning how somebody reacts to his or her environment. The members of the company are not really aware of the fact, that their decisions and behaviour is based on these premises. Deviances are rarely tolerated. The impossibility of challenging aspects of these assumptions is often the reason for cultural conflicts (Online: Landau, 2007). In conclusion, organisation culture acts as an invisible and pervasive social background influencing individual, group and organisational actions, informal and formal structures, communications, leadership, the conduct of external and internal relationships and the way the organisation represents itself to the community (Online: Greene, 2007). In addition it is important to state that corporate culture is an integrated system and not a number of single aspects. 3.2 Value creation of the first generation in Family Firms The general definition of corporate culture given in the previous sub-chapter will now be applied to the special organisational structure of family firms. Concerning family businesses, culture is the overlapping of family values and firm s values. The soul culture of the family firm is based on the personal characteristics of the founder generation and moreover on the experiences made during the development stage of the business (Online: Atan et al., 2013). Because of the dominant role of the first generation through successive stages and not only during the entrepreneurial period, the specific owner motivations and values are powerful cultural drivers. The founder family wants the business to develop in accordance with their personal idea of achievement, leading to an expression of uniqueness as for instance in leadership style. As a result the founder can be described as the imperfect embodiment of company culture (Online: Denison et al., 2004). Because the first generation build up their own business from the very beginning their sometimes contradictory values and opinions are reflected in the established companies. If this cultural uniqueness is understood and nurtured, it can be one of a firm s greatest advantages. It actually is a duty of the founder to establish an organisation s identity including its core beliefs, purpose and vision, otherwise the employees and the management board develop no deeper connectedness to the company. The aforementioned connection also to standards of behaviour and time-tested core values is established by the personal involvement of the first generation and the shared identities (Online: Denison et al., 2004). This consciousness of the necessity of a positive culture and a good working atmosphere lead to eventual success. 9

18 But it became apparent that large family businesses frequently ignore their greatest strength. Retaining a connectedness to the past and simultaneously adapting and living the founders vision is a tremendous and underexploited asset in family firms. (Online: Denison et al., 2004). Therefore the culture established by the founder plays an important role in ascertaining whether the company continues beyond the first generation (Online: Dyer, 1988). As last-mentioned the endurance of values is an important topic concerning the transfer of a business to the next generation. The owning family transmits values very early, often before they consciously realise. The entrepreneur couple teaches values mainly by living them which has the positive effect that the possible successor often sees given aspects of a company s culture as self-evident (Aronoff et al., 2011, P. 45). Referring back to the founder of the family business helps understand the importance of his or her influence on the embedded culture but it should be noted that a culture is dynamic and it evolves through discursive processes involving division and difference and in relationships (Online: Fletcher, 2012). 3.3 Family-friendly staffing policy as a competitive advantage The behaviour of supervisors is often based on the corporate culture of the company which influences both the level of work-family conflict and the resulting development of family-friendly policies. The latter term lacks a precise definition, it may be understood as a shorthand for describing the growing variety of policies and programs that organisations are introducing with the aim of facilitating the ability of employees to fulfill their family-based responsibilities (Online: Rosin, 2013). Companies work with different policies including leave entitlements (career break, parental leave), financial assistance (maternity pay, child care), employees hours of work (part-time, flex-time, job sharing) concerning several particular responsibilities, for instance elder care or children (Online: Scheibl, 1998). There are many examples of firms who have profited from implementing those practices and policies in terms of increasing productivity and employee morale and reducing turnover. For instance by working with work-life policies such as post maternity leave arrangements, day care centers and furthermore, a higher rate of women returning to work after having a child is reported. Moreover backup childcare programs, extensive leave arrangements and other possibilities as mentioned before to support employees lead to a higher level of perceived organisational performance and at the same time meet turnover and fluctuation concerns of the management board (Online: Poelmans, 2004, P. 412). The latter is reflected by the statement of General Mills CEO Steve Sanger: It s far better outcome for someone (in whom the company has invested in recruiting and development) to take a leave than to lose someone who could make a contribution not just next month but 15 or 20 years from now (Online: Poelmans, 2004, P. 412) It implies a notion of synergy in the way that family-friendly staffing policy may present benefits both for the family life and for the business. For instance the absenteeism and stress is reduced, and an increased satisfaction, commitment and productivity can be noticed which is beneficial for the company. Moreover a recent study gave evidence that businesses which demonstrate a commitment to work-life balance of their employees have a higher amenity to working parents. 59% of parents in this study reported that the presence of family-friendly policies was an important factor to accept the job offer (Online: Rosin, 2013). 10

19 It is a necessity for companies to adapt to several changes due to a constantly shifting business environment. The Unternehmensmonitore Familienfreundlichkeit of the Institut der Deutschen Wirtschaft proved that stack up against the years of 2003, 2006 and 2009 an extensive increase of the importance plus the extension of family-oriented policy in German businesses were noticed (Gerlach, 2012, P. 11). Besides given a growing prevalence of single-parent and dual-income families, ignoring the work-family conflict of employees can be very risky for firms. Consequently, companies who are engaged with this topic and consciously try to form a supportive culture are establishing a sustainable and effective competitive advantage (Online: Poelmans, 2004, P. 426). 11

20 4. Methodology of empirical study As it has been summarised in the former theoretical part of this thesis, there exist detailed literature concerning corporate culture, family businesses and gender specific leadership styles. The enquiry revealed that there exist some knowledge gaps which should be answered with the research question underlying this thesis. These gaps include the feminine imprint on the culture in family firms, the influence of female managers on family-friendly staffing policy, the attitudes of male successors concerning the existing culture and the sustainability of the mentioned corporate culture during a business succession. In order to fill these research gaps the present research question was developed which led to the creation of presumptions. To be able to answer the work hypotheses underlying this study, the thesis benefits from empirical social research. The latter is usually perceived as a systematic ascertainment and interpretation of social aspects. The notion of systematic points to the use of specific rules within the empirical research (Atteslander, 2000, P. 5). In the following these rules and the consequently related approach of the underlying research in this thesis will be defined. 4.1 Exploratory research design The selection of the research design is an important factor in empirical social research because the quality of results is dependent on the choice of the acquisition instrument. On the other side each research question requests its own special method of collecting data. This thesis concentrates on the subjective view of specific persons in a defined environment, the family firm, which excludes a statistical sampling and consequently the quantitative research (Lamnek, 2005). In turn the qualitative research has less claim to test hypotheses but rather to generate them. The formulation of hypotheses and generation of theories is a typical discipline of qualitative social research (Mayring, 2010, P. 22). The latter is achieved by exploration, meaning an information collection as an extensive, penetrative ascertainment of the research field (Kromrey, 2000, P. 67). The information collection is important for studies where the research field is not really explored and only little literature exists on the specific topic. Especially interviews fulfill the criteria because allow a thorough analysis and traceability of interpretations, which are based on the transliterations (Lamnek, 2005, P. 329). By means of work hypotheses and presumptions which do not meet the requirements of the hypotheses definition yet, the data should be investigated. 4.2 The research objective As already mentioned in the introduction and the approach this thesis intends to investigate the gender specific imprint of the corporate culture in a family business and its sustainability during a generational transfer due to a business succession. The first work hypothesis suggests that female managers, for instance the wife of the director of the family firm, have a higher and more specific influence on the culture of the company due to the already explored differences in leadership style of men and women. The specific influence on the 12

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